Chancellor Urged To Slash Stamp Duty To Boost Housing Market

Economists have urged Chancellor Rachel Reeves to slash stamp duty for pensioners to stimulate the housing market.

The Policy Exchange argues that exempting pensioners from this tax would encourage downsizing, freeing up larger homes for families. The report highlights that the high costs of stamp duty deter older homeowners from moving, impacting their ability to leave an inheritance. The stamp duty charge increases with rising property values, making downsizing increasingly expensive and though the government faces fiscal constraints, targeted stamp duty cuts would increase the overall number of market transactions benefiting the Treasury's finances. In light of this, David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading property tax advisory, argues that the Chancellor ought to look at well-targeted reform to stamp duty as a means to bolster transactions. This would boost the UK's housing market by supporting first-time buyers and pensioners.

Despite stamp duty generating around £13 billion annually, a temporary cut in 2022 caused receipts to surge to £17.5 billion. David Hannah suggests that reassessing the stamp duty thresholds could further stimulate the UK property market. Currently, homes valued at £250,000 or less are exempt, while those valued between £250,000 and £925,000 face a 5% levy. With the average UK home priced at £285,201, it’s clear that these thresholds are overdue for a review. Hannah argues that adjusting these bands would not only boost sales but also benefit pensioners looking to move up the property ladder. By increasing demand for mid-to-high-end properties, this would create a ripple effect, enabling current homeowners to sell their lower-end properties and invigorating Britain’s stagnant housing market.

David Hannah, Group Chairman of Cornerstone Tax, comments:

“SDLT payment bands have been long overdue for an overhaul as they have never been index-linked to house price inflation. An increase in these thresholds would stimulate activity at the lower end of the property market and allow first-time buyers to reduce the amount they need to borrow, thus improving their affordability calculations. Furthermore, creating an exemption for pensioners would allow more Brits to downsize freeing up homes for those wishing to get onto the property market.

“As we all know, a rising tide lifts all boats, those looking to purchase properties on the mid-to-high end of the property market will now have a chance to sell their low-end properties as a result of the increase in demand from prospective buyers, contributing to further momentum within the housing market.”